As I have no experience trading forex, I've been following this just to learn more about the market (for better or worse). Looking over your statement, I notice you are down over 4% in interest charges. Can you explain how these are calculated?
When you have fx positions, you pay/receive the interest rate differential between the two currencies. I don't know the exact numbers, but Japan's short term interest rates are next to nothing while the U.S. is higher. So, if you are long yen, short dollars you receive the Japanese rate and pay the U.S. rate. Conversely, if you are long dollars, short yen you have to pay the short term rate on the yen, and you receive the short term rate on the dollars. That's called the carry trade, and it is commonly cited as a main factor in the dollar's strength over the last year or so. [on a side note, one of the interesting things about trading currency is that traders might go from focusing on the interest rate differential one day to the potential for capital appreciation the next day (which are pretty much the complete opposite). Read the interview with Bill Lipschutz in The New Market Wizards. I find it fascinating] Different firms have different ways for calculating the differential. My understanding is that Oanda pays/charges interest continuously (by the second).
Yes, I noticed that he was down that much. I understand how he did that. To dynamic on the interest explanation - thanks. Also, I'll dig up my copy of New Market Wizards and give it a read.
Just for kicks here is the proforma performance of one of our trading systems...its FX only,3 instruments $/SF, $/JPY and â¬/$. It is also one of our most volatile systems as it is highly geared (for us)!! The reason I'm posting it is that we only use a margin to equity ratio of 30% at any time during the day and no overnight positions. You will see that during a couple of months last year if we had used 100% (but we are not that irresponsible) we could have made over 100% in a month!!! Also we have never leveraged up following our gains so our margin to equity ratios have actually fallen. As the original writer of this thread is now realising it may be possible to 'double your money' but only if you are prepared to risk the bank....no self respecting trader/manager should or would ever trade that way. Peace & Profit Month P&L US $ $100,000.00 % Performance VAMI Jan'05 $19,632.70 $119,632.70 19.63% 1196.33 Feb'05 $4,077.07 $123,709.77 3.41% 1237.1 Mar'05 $70,049.98 $193,759.75 56.62% 1937.6 Apr'05 $1,644.79 $195,404.54 0.85% 1954.05 May'05 -$16,454.62 $178,949.92 -8.42% 1789.5 Jun'05 $68,238.28 $247,188.20 38.13% 2471.88 Jul'05 -$7,167.99 $240,020.21 -2.90% 2400.2 Aug'05 $46,521.06 $286,541.26 19.38% 2865.41 Sep'05 $18,230.18 $304,771.44 6.36% 3047.71 Oct'05 $37,066.52 $341,837.96 12.16% 3418.38 Nov'05 $86,359.97 $428,197.94 25.26% 4281.98 Dec'05 $60,137.18 $488,335.12 14.04% 4883.35 Jan'06 $61,730.54 $550,065.65 12.64% 5500.66 Feb'06 $16,283.72 $566,349.37 2.96% 5663.49 Mar'06 -$19,428.90 $546,920.47 -3.43% 5469.2